Light at the end of the oil and gas tunnel

By Geoff Lee

February 23, 2017 12:00 AM

A LITTLE GOOD NEWS Pierre Cléroux, vice-president, research and chief economist for BDC in Montreal, shared his 2017 economiic forecast for Saskatchewan and Alberta at a Lloydminster Chamber of Commerce luncheon at the Royal Hotel Feb. 21. GEOFF LEE LLS PHOTO

Pierre Cléroux, chief economist for Business Development Bank of Canada (BDC) sees lots of light at the end of the proverbial economic tunnel, particularly for the oil and gas in Western Canada.
Cléroux spoke about his positive economic lookout for 2017 during a lunch presentation to members of the Lloydminster Chamber of Commerce at the Royal Hotel on Feb. 21.
On the oil and gas sector, he said, “We believe that finally, the market is rebalancing, so the price (of oil) has been increasing and will to do so but slowly.”
He said the the worst is behind us and BDC believes the price will continue to improve with a positive impact in both Alberta and Saskatchewan.
BDC is the commercial bank of entrepreneurs that is seeing a little more investment now in the oil sector along with a bit more economic activity.
“The number of rigs has been increasing, so we believe that this year 2017 is going to be the year of the rebound,” said Cléroux.
“Both for Saskatchewan and Alberta, we expect to see positive growth in the economy.”
In his online outlook, Cléroux noted higher and more stable crude oil prices have boosted Canadian business confidence since the beginning of the year.
He projects the Canadian economy will generate a real GDP growth of two per cent in 2017.
He noted this is confirmed by several indicators and suggests business investment will pick up in 2017, but the momentum will be slower in Lloydminster.
“I think the region will also benefit from the increase of the oil price a bit more slowly, because the oil produced here —the price is a little bit lower (differential price), but I think we are going to see a bit more economic activity as well,” said Cléroux.
As for the Trump factor, Cléroux says the U.S. president should have a positive bearing on oil and gas with his objective to de-regulate the industry.
“One of his first actions was to support the Keystone pipeline,” said Cléroux.
“Actually, for the energy sector, I think he’s going to have a positive impact.”
Cléroux is on a Western Canadian speaking tour and was introduced to a crowd of about 100 business people by chamber board member, Rob Saunders.
“We’re fortunate that he made a stop in Lloydminster to share his knowledge and information with us today,” said Saunders.
“We’re just in the first quarter here and everyone looks to the industry leaders to give their prediction and give us some tips and some topics people should consider as they’re approaching their budgets.”
Cléroux took the opportunity to link up Chamber members to BDC’s new online productivity benchmarking tool.
“We have put together a tool for business people to evaluate their productivity,” he said.
The tool is available at website and allows entrepreneurs to measure their productivity and compare it with other businesses in the same sector.
“It’s free, it’s easy to use,” he said.
The tool will be useful for the chamber’s retail and real estate members that are still feeling the impact of the economic downturn.
Cléroux said it’s going to take a bit more time for those sectors to recover.
“Over the last two years, both in Alberta and Saskatchewan, the retail sales have been down, the housing market has been slow,” he said.
“And as the recovery is happening, this year, the situation will improve, but it’s going to take some time before we see a positive impact on the housing and on the retail sector.”
Cléroux added the cheaper loonie has been great for the tourist industry and many exporting manufacturers.
“The adjustment in the Canadian economy is likely to continue into 2017, as the Canadian dollar should continue to favour exports.”

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